The Role Of Transnational Corporations (TNCs) In Globalisation

Transnational corporations (TNCs) and multinational corporations are often cited as being key drivers behind globalisation. Definitions of these two types of corporation are slightly different but in general terms they can be thought of as the same entity (from now on they shall be referred to as TNCs). The majority of global production used to take place within national boundaries. In the last few decades TNCs have changed this through international trade and production. This means that many TNCs have their headquarters located in one country, their sourcing or production networks in one or more other countries and their share listings on several stock exchanges.

 

Most of the largest TNCs are based in more economically developed countries (MEDCs). Recently however there has been a marked expansion in the size and number of TNCs from the richer developing countries and newly industrialised countries (NICs). The world's largest TNCs are the principal drivers of international production and trade. More than a third of all global trade takes place between TNCs and 70% of all trade involves at least one TNC! TNCs have driven globalisation by moving operations across the world and by doing so have created a global economy. The growth of TNCs has been particularly rapid since the 1970s: in 1975 there were approximately 7,000 TNCs, by 2000 there were over 60,000!

 

The impact of TNCs on the countries in which they operate can be positive and negative. Laws in foreign countries are often more relaxed and environmental safeguarding is often overlooked. TNCs often make the most of these relaxed laws as they have no requirement to be environmentally friendly. Other negative impacts include social issues and human rights. Note: the positive and negative issues of globalisation will be looked at in a later post.

 

The image below could be presented to a class with the focus on the 10 TNCs at the centre of the image. The class could be divided into groups of 2-3 and asked to research one of the TNCs or a TNC of their own choice (if cleared with the teacher) on computers/laptops. Alongside general information on the TNC there could be set requirements from the research. This might include finding the locations of their TNCs: (and setting this out on a map).

 

Ø  Headquarters

Ø  Research and development

Ø  Source of raw materials

Ø  Manufacturing